Veeco Announces Second Quarter and Six Month 2008 Financial Results

PLAINVIEW, N.Y., Jul 28, 2008 (BUSINESS WIRE) -- Veeco Instruments Inc. (Nasdaq: VECO) today announced its
financial results for the second quarter and six months ended June 30,
2008. Veeco reports its results on a generally accepted accounting
principles ("GAAP") basis, and also provides results excluding certain
items. Investors should refer to the attached table for details of the
reconciliation of GAAP operating income to earnings excluding certain
items.

Veeco will host a conference call reviewing these results at 5:00
pm EDT today at 1-877-856-1964 (toll free) or 1-719-325-4812. The call
will also be webcast live on the Veeco website at www.veeco.com. A
replay of the call will be available beginning at 8:00pm ET through
midnight on August 12, 2008 at 888-203-1112 or 719-457-0820, using
passcode 3021674, or on the Veeco website. Please also see the Veeco
website for a slide presentation reviewing financial data.

Second Quarter 2008 Highlights

-- Revenue was $114.4 million, up 16% compared to $98.8 million
last year, and ahead of guidance of $102-$110 million;

-- Bookings were $136.5 million, up 21% compared to $112.5
million last year, and ahead of guidance of $110-$118 million;

-- Net income was $4.2 million, or $0.13 per share, compared to a
net loss of ($2.6) million, or ($0.08) per share, last year.
Veeco's guidance was for GAAP EPS to be between ($0.07) -
$0.02 per share.

-- Veeco's earnings per share, excluding certain items, was $0.16
compared to earnings per share of $0.05 last year, ahead of
Veeco's guidance of $0.03-$0.09 per share.

John R. Peeler, Veeco's Chief Executive Officer, commented, "We
are pleased to report second quarter results that were ahead of our
guidance for bookings, revenues and earnings. Second quarter LED &
Solar Process Equipment revenues were $45.1 million, up 61% compared
to the prior year and 7% sequentially, representing our largest
segment. Data Storage Process Equipment revenues increased to $36.7
million, up 15% from last year and 52% sequentially, with some
customer acceleration of delivery dates for Veeco equipment. Metrology
revenue was $32.6 million, down 16% compared to prior year and 10%
sequentially, primarily due to continued weak semiconductor and
research end market conditions."

"Veeco's $136.5 million in second quarter bookings reflect the
best quarterly performance we have had in two years. LED & Solar
bookings were $52.1 million, up 43% compared to last year and 35%
sequentially, with customers making significant technology and
capacity investments. Our Data Storage business reported second
quarter orders of $51.7 million, up approximately 25% from the prior
year and 27% sequentially, as key hard drive manufacturers invested in
equipment capacity aligned to their wafer size change programs.
Veeco's Metrology bookings were $32.7 million, declining 6% versus the
prior year but increasing 9% on a sequential basis."

Mr. Peeler added, "We completed the purchase of Mill Lane
Engineering, a key equipment supplier to Global Solar Energy Inc.,
during the second quarter, expanding Veeco's solar product offerings
to include web coaters for flexible photovoltaic applications. As
expected, this business had no contribution to our second quarter
revenue due to purchase accounting requirements and the timing of the
completion of the acquisition, and no new orders for web coaters were
received during the quarter."

Second Quarter 2008 Summary

Veeco's revenue for the second quarter of 2008 was $114.4 million,
compared to $98.8 million in the second quarter of 2007. Second
quarter 2008 operating income was $6.2 million compared with an
operating loss of ($1.0) million in the second quarter of 2007.
Veeco's second quarter 2008 earnings before interest, taxes and
amortization excluding certain charges (EBITA) was $8.7 million,
compared to $2.8 million last year. Second quarter 2008 net income was
$4.2 million, or $0.13 per share, compared to a net loss of ($2.6)
million, or ($0.08) per share, last year. Excluding amortization
expenses and using a 35% tax rate in both periods and certain charges
in 2007, second quarter 2008 earnings per share were $0.16, compared
to $0.05 in 2007.

Six Month 2008 Summary

Veeco's revenue for the first six months of 2008 was $216.8
million, compared to $197.9 million in the first six months of 2007.
Six month 2008 operating income was $6.3 million compared with $0.7
million in the first six months of 2007. Veeco's EBITA was $13.9
million for the first six months of 2008, compared to $8.5 million
last year. Net income was $2.6 million, or $0.08 per share in the
first six months of 2008, compared to a net loss of ($2.3) million, or
($0.07) per share, last year. Excluding certain charges, amortization
expenses and using a 35% tax rate both periods, earnings per share
were $0.25 in the first six months of 2008, compared to $0.15 in the
first six months of 2007.

Outlook

The Company forecasts third quarter 2008 revenues to be in the
range of $113-$118 million. Veeco's earnings per share are currently
forecasted to be between ($0.12) - ($0.03) on a GAAP basis. In the
third quarter Veeco will incur a charge to earnings of $3.7 million
related to the expense associated with the mutually agreed termination
of the employment agreement of Veeco's former CEO Edward Braun,
following the successful completion of the CEO transition (Mr. Braun
remains Veeco's Chairman). In addition, Veeco will also incur a $0.7
million third quarter charge for restructuring in Metrology, and a
$0.4 million charge related to the required purchase accounting
adjustment to write up inventory to fair value in connection with the
purchase of Mill Lane Engineering. Excluding these charges and
amortization of $3.1 million, and using a 35% tax rate, Veeco's third
quarter earnings per share are currently forecasted to be between
$0.10 to $0.15 on a non-GAAP basis. Veeco currently expects that its
third quarter 2008 bookings will be in the range of $113-$118 million,
with some normal seasonality anticipated.

Mr. Peeler commented, "We are pleased that at the mid-point of the
year, even with the backdrop of difficult overall economic conditions,
Veeco is achieving results ahead of our original expectations. We
remain on track to significantly improve Veeco's performance on both
the top and bottom line in 2008. We currently forecast that 2008
revenues will be between $450 and 455 million."

About Veeco

Veeco Instruments Inc. manufactures enabling solutions for
customers in the HB-LED, solar, data storage, semiconductor,
scientific research and industrial markets. We have leading technology
positions in our three businesses: LED & Solar Process Equipment, Data
Storage Process Equipment, and Metrology Instruments. Veeco's
manufacturing and engineering facilities are located in New York, New
Jersey, California, Colorado, Arizona and Minnesota. Global sales and
service offices are located throughout the U.S., Europe, Japan and
APAC. http://www.veeco.com/

To the extent that this news release discusses expectations or
otherwise makes statements about the future, such statements are
forward-looking and are subject to a number of risks and uncertainties
that could cause actual results to differ materially from the
statements made. These factors include the risks discussed in the
Business Description and Management's Discussion and Analysis sections
of Veeco's Annual Report on Form 10-K for the year ended December 31,
2007 and in our subsequent quarterly reports on Form 10-Q, current
reports on Form 8-K and press releases. Veeco does not undertake any
obligation to update any forward-looking statements to reflect future
events or circumstances after the date of such statements.

Veeco Instruments Inc. and Subsidiaries
Reconciliation of operating income (loss) to earnings excluding
certain items
(In thousands, except per share data)
(Unaudited)
Three months Six months
ended ended
June 30, June 30,
--------------- ---------------
2008 2007 2008 2007
------ -------- ------ ------
Operating income (loss) $6,230 ($1,010) $6,382 $728
Adjustments:
Amortization expense 2,426 2,368 4,382 6,277
Restructuring expense - 1,445 2,875(1) 1,445
Asset impairment charge - - 285(2) -
------ -------- ------ ------
Earnings before interest, income
taxes and amortization
excluding certain items ("EBITA") 8,656 2,803 13,924 8,450
Interest expense, net 969 772 1,861 1,591
Gain on extinguishment of debt - - - (738)(3)
Adjustment to exclude gain on
extinguishment of debt - - - 738
------ -------- ------ ------
Earnings excluding certain items
before income taxes 7,687 2,031 12,063 6,859
Income tax provision at 35% 2,690 711 4,222 2,401
Noncontrolling interest, net of
income tax provision at 35% (46) (149) (95) (233)
------ -------- ------ ------
Earnings excluding certain items $5,043 $1,469 $7,936 $4,691
====== ======== ====== ======
Earnings excluding certain items
per diluted share $0.16 $0.05 $0.25 $0.15
Diluted weighted average shares
outstanding 31,590 31,263 31,435 31,278
(1) During the first quarter of 2008, the Company recorded a
restructuring charge of $2.9 million, consisting of $2.6 million of
costs associated with the consolidation and relocation of the lease
for our Corporate headquarters, and $0.3 million of personnel
severance costs.
(2) During the first quarter of 2008, the Company recorded a $0.3
million asset impairment charge related to fixed asset write-offs
associated with the consolidation and relocation of our Corporate
headquarters.
(3) During the first quarter of 2007, the Company repurchased $56.0
million aggregate principal amount of its 4.125% convertible
subordinated notes. As a result of these repurchases, the Company
recorded a gain from the early extinguishment of debt in the amount
of $0.7 million.
NOTE - The above reconciliation is intended to present Veeco's
operating results, excluding certain items and providing income taxes
at a 35% statutory rate. This reconciliation is not in accordance
with, or an alternative method for, generally accepted accounting
principles in the United States, and may be different from similar
measures presented by other companies. Management of the Company
evaluates performance of its business units based on EBITA, which is
the primary indicator used to plan and forecast future periods. The
presentation of this financial measure facilitates meaningful
comparison with prior periods, as management of the Company believes
EBITA reports baseline performance and thus provides useful
information.